Between 1986 and 1996, the Standard Deviation of the Returns

question 32

Multiple Choice

Between 1986 and 1996, the standard deviation of the returns for the NYSE and the DJIA indexes were 0.10 and 0.09, respectively, and the covariance of these index returns was 0.0009. What was the correlation coefficient between the two market indicators?

• A) .1000
• B) .1100
• C) .1258
• D) .1322
• E) .1164

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Definitions:

Decrease

A reduction in quantity, size, or intensity of a particular activity, value, or level.

Financial Futures Contracts

Agreements to buy or sell financial instruments or commodities at a future date for a price that is established at the time of the contract.

DAX 30 Index

A stock market index representing 30 of the largest and most liquid German companies trading on the Frankfurt Stock Exchange.

CAC 40 Index

A benchmark French stock market index representing a capitalization-weighted measure of the 40 most significant stocks among the 100 largest market caps on the Paris Bourse.